Eurozone finance ministers attack golden handshakes
Eurozone finance ministers launched an attack on Tuesday against excessive golden handshakes, threatening to tax the large payments to senior executives when they leave a company.
“We believe that the excesses of captains of industries’ (pay packages) that we have seen in several countries ... are really quite scandalous and we are continuing to examine what can be done,” Luxembourg Premier and Finance Minister Jean-Claude Juncker told reporters after a meeting with his colleagues from the 15-nation euro zone. “We are currently examining fiscal instruments that might be brought into play that might combat these excesses,” he said, “....we would no longer accept a situation where in fiscal terms these golden handshakes would be tax deductible.”
Golden handshakes refer to significant severance package offered to high-ranking executives by major corporations when the executives loses his job due to firing, restructuring, or even scheduled retirement. It can be in the form of cash, equity and other benefits, and is often accompanied by an accelerated vesting of stock options.
The large payments have been criticized since there is no requirement that the executive perform well. In some high-profile cases, executives cashed in their stock options, while under their stewardship their companies lost millions of dollars and thousands of workers were laid off.
The Netherlands is introducing new rules to impose a 30% super tax on such pay packages above €500,000 ($775,000) and limit bonuses and stock options to 100% of pay. (people.com.cn)
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.